Prepaid Cards: 5 Essentials You Need to Know
When prepaid cards were first introduced decades ago, they already made quite an impression. However, when famous names like Disney and the Kardashians introduced their own versions of the innovative financial tool, people loved them even more.
The perception that prepaid cards are nothing more than a “one-and-done” use case has been proven false a long time ago. Nowadays, prepaid cards are already seen for what they truly are—a beneficial financial management tool that has staying power.
In addition, today’s prepaid cards are also considered inclusion tools, travel companions, and a convenient payment method designed for the next-generation consumers as well as businesses. In fact, prepaid cards are now used for social benefit disbursements, credit building, and a means for companies to pay employee salaries as well as per-diem expenses.
If you’re one of the many who’s considering getting a prepaid card, here’s some of the basics you need to know:
- You can pick a prepaid card that suits your lifestyle.
Understandably, there’s more than one prepaid card available in the market. That being said, choosing the best one can get challenging with so many options currently available at your disposal.
Fortunately, a quick Google search can help you find the best prepaid card that will best suit your needs and lifestyle. To make your search easier, it is also important that you take into account how you spend and manage your money. From there you can pick the one that will match your needs best.
- Prepaid cards come with varying features.
Since prepaid cards have different issuers, they also have diverse features. However, they also share common features. For instance, depending on the issuer, prepaid card users have several options when it comes to loading money on their cards. Some of the options include direct deposits, loading cash at retailers, depositing checks, and loading money through secure online portals.
- Prepaid cards are different from debit cards.
While prepaid and debit cards share many surface similarities, they have a major distinction. For starters, debit cards are linked to checking accounts while prepaid cards are not. Also, to use your prepaid card, you have to preload it with money first.
Fortunately, once you are able to successfully load the money on the account, you’ll be able to use the card right away, whether for purchase transactions or ATM withdrawals. Also, when using a debit card, overspending can occur if you opt in to the overdraft protection program.
- Prepaid cards and credit cards are not the same.
Sure, both credit and prepaid cards also share common features. No wonder many people mistake one for the other. However, the two cards are very different. One distinct difference between the two is you’ll be “borrowing” money from the bank/issuer each time you use your credit card.
When you use a prepaid card on the other hand, you’ll be using your own money, the one you preloaded on the card. As soon as the balance on your prepaid card has been depleted, you won’t be able to use the card until you load money onto it again.
- Prepaid cards have many enticing benefits.
Prepaid cards offer a lot of enticing (and exciting!) benefits. Some of the most notable ones include:
You’ll be able to control your spending. If you need help with managing your money, a prepaid card can be your helpful ally. Since your spending will be limited to the amount that’s available on the card, you won’t be able to spend more than you intend to or can afford to. In other words, as soon as the balance on the card has been depleted, your spending also stops.
You can easily obtain one. Unlike credit or debit card applications, prepaid card applications won’t require background or credit checks. That means even if you have a less than desirable credit history, you can still get a prepaid card.
Your personal information is not compromised. Prepaid cards are not linked to any of your personal or financial information so you don’t have to worry about any of your personal data being compromised.